The CFTC had filed ten enforcement actions against eleven different firms allegedly illegally soliciting the public to engage in foreign exchange (“forex”) trading while remaining unregistered with the Commission. This is the second multi-business sweep the CFTC has orchestrated this year. In January, suits were filed against 14 other entities for similar violations.
Suits were filed against the following firms:
- 1st Investment Management, LLC, a Wyoming LLC;
- City Credit Capital, (UK) Ltd., a United Kingdom company;
- Enfinium Pty Ltd., an Australian company;
- GBFX, LLC, a New York LLC;
- Gold & Bennett, LLC, a New York LLC;
- InterForex, Inc., a British Virgin Islands company;
- Lucid Financial, Inc., a Utah corporation;
- MF Financial, Ltd., a Belize company with offices in New York City;
- O.C.M. Online Capital Markets Limited, a British Virgin Islands company
- Trading Point of Financial Instruments Ltd. a Cyprus company; and
- Windsor Brokers, Ltd., a Cyprus company.
The CFTC is alleging that all but two of the companies named above acted as Retail Forex Dealers (“RFED”). Since last fall, only CFTC-registered RFEDs are permitted to take or offer to take the opposite side of a customer’s forex transaction. The other two firms, GBFX, LLC/Gold & Bennett, LLC and Lucid Financial, Inc., are accused of soliciting customers for RFEDs without registering as Introducing Brokers (“IB”).
In a statement, CFTC Director of Enforcement David Meister said that “These actions reflect the CFTC’s continued resolve to make the forex market safer for investors by strictly enforcing the CFTC’s new forex regulations, which became effective in October 2010. These new regulations require entities that wish to participate in the forex market to register with the CFTC and abide by regulations that are intended to protect the public from potentially fraudulent operations.”
The Commission is seeking preliminary injunctions to prevent the ten defendants from operating illegally until they comply with the CEA and CFTC Regulations. The complaints also seek civil monetary penalties, trading and registration bans, disgorgement, and rescission.
In the previous round of suits, eleven settled the charges or defaulted. Three are still pending. The CFTC is using the opportunity to urge the public to be careful where they invest funds.